Chipotle Mexican Grill, Inc. Announces First Quarter 2013 Results

  Chipotle Mexican Grill, Inc. Announces First Quarter 2013 Results

Business Wire

DENVER -- April 18, 2013

Chipotle Mexican Grill, Inc. (NYSE: CMG) today reported financial results for
its first quarter ended March 31, 2013.

Highlights for the first quarter of 2013 as compared to the first quarter of
2012 include:

  *Revenue increased 13.4% to $726.8 million
  *Comparable restaurant sales increased 1.0%
  *Restaurant level operating margin was 26.3%, a decrease of 110 basis
    points
  *Net income was $76.6 million, an increase of 22.2%
  *Diluted earnings per share was $2.45, an increase of 24.4%
  *Opened 48 new restaurants

“We are committed to sourcing the finest ingredients we can, and to skillfully
preparing and cooking them with great care, because we know it results in
exceptional tasting food that our customers appreciate. We believe the more
people care about their food, and discover where it comes from, the more
likely they are to become loyal customers of Chipotle,” said Steve Ells,
Founder, Chairman and co-CEO of Chipotle.

First quarter 2013 results

Revenue for the quarter was $726.8 million, up 13.4% from the prior year
period. The growth in revenue was the result of new restaurants not in the
comparable base and a 1.0% increase in comparable restaurant sales. Comparable
restaurant sales growth was driven primarily by increased traffic partially
offset by a loss of trading days in the quarter as compared to the first
quarter of 2012.

During the quarter we opened 48 new restaurants, bringing the total restaurant
count to 1,458.

Food costs were 33.0% of revenue, an increase of 80 basis points driven by
higher commodity costs. Higher commodity costs were driven by inflationary
pressures on many of our ingredients, particularly salsa and other produce, as
well as dairy and chicken. This increase was partially offset by lower avocado
prices.

Restaurant level operating margin was 26.3% in the quarter, a decrease of 110
basis points from the prior year period. The decrease was primarily driven by
higher food costs and to a lesser extent from higher occupancy costs.

G&A costs were 6.1% of revenue, down 160 basis points from the prior year
period primarily due to lower non-cash, non-economic stock compensation
expense, and from lower payroll tax expense related to the exercise of fewer
options, and from favorable sales leverage. The prior year stock compensation
expense included a one-time charge of $5.6 million related to performance
shares issued in 2010.

Net income for the first quarter of 2013 was $76.6 million, or $2.45 per
diluted share, compared to $62.7 million, or $1.97 per diluted share, in the
first quarter of 2012. Income taxes in the first quarter benefited by about
$3.3 million related to 2012 tax credits, which represents an earnings per
share benefit of $.10 per share.

“We are pleased with our performance during the first quarter of 2013. What
pleases me even more than the continued sales and earnings growth is the
empowered people culture we have in our restaurants. Our field teams better
understand how to create this special culture and the quality of our managers
in our restaurants is getting better all the time. Our restaurant managers and
crew take great pride in running efficient operations and in creating an
exceptional restaurant experience for our guests,” said Monty Moran, co-CEO.

Outlook

For 2013, management expects the following:

  *165 – 180 new restaurant openings
  *Flat to low single digit comparable restaurant sales excluding any
    potential menu price increases
  *An effective full year tax rate of approximately 38.5% (36.3% in the first
    quarter, and approximately 39.1% for the remainder of 2013).

Definitions

The following definitions apply to these terms as used throughout this
release:

Comparable restaurant sales represent the change in period-over-period sales
for the comparable restaurant base. A restaurant becomes comparable in its
13^th full calendar month of operation.

Average restaurant sales refers to the average trailing 12-month sales for
restaurants in operation for at least 12 full calendar months.

Restaurant level operating margin represents total revenue less restaurant
operating costs, expressed as a percent of total revenue.

Conference Call

Chipotle will host a conference call to discuss complete first quarter 2013
financial results on Thursday, April 18, 2013 at 4:30 PM Eastern time. A press
release with first quarter 2013 financial results will be issued at
approximately 4:00 PM Eastern time that same day.

The conference call can be accessed live over the phone by dialing
1-888-503-8163 or for international callers by dialing 1-719-457-2710. A
replay will be available one hour after the call and can be accessed by
dialing 1-877-870-5176 or 1-858-384-5517 for international callers; the
password is 4684496. The replay will be available until April 25, 2013. The
call will be webcast live from the company's website at chipotle.com under the
investor relations section. An archived webcast will be available one hour
after the end of the call.

About Chipotle

Steve Ells, Founder, Chairman and Co-Chief Executive Officer, started Chipotle
with the idea that food served fast did not have to be a typical fast food
experience. Today, Chipotle continues to offer a focused menu of burritos,
tacos, burrito bowls (a burrito without the tortilla) and salads made from
fresh, high-quality raw ingredients, prepared using classic cooking methods
and served in a distinctive atmosphere. Through our vision of Food With
Integrity, Chipotle is seeking better food not only from using fresh
ingredients, but ingredients that are sustainably grown and raised responsibly
with respect for the animals, the land, and the farmers who produce the food.
A similarly focused people culture, with an emphasis on identifying and
empowering top performing employees, enables us to develop future leaders from
within. Chipotle opened its first restaurant in 1993 and currently operates
over 1,450 restaurants. For more information, visit chipotle.com.

Forward-Looking Statements

Certain statements in this press release, including the expression of
confidence in the likelihood of people becoming loyal Chipotle customers, as
well as statements under the heading “Outlook” of our expected number of new
restaurant openings, comparable restaurant sales trends, potential menu price
increases, and effective tax rates in 2013, are forward-looking statements as
defined in the Private Securities Litigation Reform Act of 1995. We use words
such as “anticipate”, “believe”, “could”, “should”, “estimate”, “expect”,
“intend”, “may”, “predict”, “project”, “target”, and similar terms and
phrases, including references to assumptions, to identify forward-looking
statements. The forward-looking statements in this press release are based on
information available to us as of the date any such statements are made and we
assume no obligation to update these forward-looking statements. These
statements are subject to risks and uncertainties that could cause actual
results to differ materially from those described in the statements. These
risks and uncertainties include, but are not limited to, the following: the
uncertainty of our ability to achieve expected levels of comparable restaurant
sales increases due to factors such as decreased consumer spending and
economic uncertainty, our possible inability to increase menu prices or
realize the benefits of menu price increases, or the impact of competition;
factors that could affect our ability to achieve and manage our planned
expansion, such as the availability of a sufficient number of suitable new
restaurant sites and the availability of qualified employees; the performance
of new restaurants and their impact on existing restaurant sales; increases in
the cost of food ingredients and other key supplies; the potential for
increased labor costs or difficulty retaining qualified employees, including
as a result of immigration enforcement activities; the risk of food-borne
illnesses and other health concerns about our food; risks relating to our
expansion into new markets; the impact of federal, state or local government
regulations relating to our employees, our restaurant design, or the sale of
food or alcoholic beverages; risks associated with our Food With Integrity
strategy, including supply shortages and potential liabilities related to
advertising claims and other marketing activities related to Food With
Integrity; the effect of competition in the restaurant industry; the effects
of continuing economic uncertainty on our business and on our suppliers,
landlords and potential developers; risks relating to litigation; risks
relating to our insurance coverage and self-insurance; our dependence on key
personnel; risks related to our marketing and advertising strategies; security
risks associated with the acceptance of electronic payment cards or electronic
storage of confidential customer or employee information; the uncertainty of
our ability to protect our name, logo and other proprietary information or the
reputation of our brand; the potential effects of inclement weather; risks
related to the tax treatment of our separation from McDonald’s; and other risk
factors described from time to time in our SEC reports, including our most
recent annual report on Form 10-K and subsequent quarterly reports on Form
10-Q, all of which are available on our Web site at chipotle.com

                                                            
Chipotle Mexican Grill, Inc.

Condensed Consolidated Statement of Income and Comprehensive Income

(in thousands, except per share data)

(unaudited)
                                                                             
                       Three Months ended March 31
                       2013                        2012                   
Revenue                $ 726,751      100.0  %     $ 640,603      100.0  %
Restaurant
operating costs
(Exclusive of
depreciation and
amortization shown
separately below):
Food, beverage and       239,589       33.0            206,590       32.2
packaging
Labor                    171,469       23.6            151,985       23.7
Occupancy                47,620        6.6             40,509        6.3
Other operating          76,656        10.5            66,179        10.3
costs
General and
administrative           44,211        6.1             49,334        7.7
expenses
Depreciation and         22,936        3.2             20,084        3.1
amortization
Pre-opening costs        2,886         0.4             2,448         0.4
Loss on disposal         1,340        0.2            1,250        0.2   
of assets
Total operating          606,707      83.5           538,379      84.0  
expenses
Income from              120,044       16.5            102,224       16.0
operations
Interest and other       266          -              434          0.1   
income, net
Income before            120,310       16.6            102,658       16.0
income taxes
Provision for            (43,726 )     (6.0  )        (39,994 )     (6.2  ) 
income taxes
Net income             $ 76,584       10.5   %     $ 62,664       9.8    %
Earnings per
share:
Basic                  $ 2.47                       $ 2.00    
Diluted                $ 2.45                       $ 1.97    
Weighted average
common shares
outstanding:
Basic                    31,012                       31,410  
Diluted                  31,229                       31,846  
Comprehensive          $ 75,480                     $ 63,347  
income
                                                                             

                                                            
Chipotle Mexican Grill,Inc.

Condensed Consolidated Balance Sheet

(in thousands, except per share data)
                                                                   
                                               March 31          December 31
                                               2013              2012
                                               (unaudited)
                                                                   
Assets
Current assets:
Cash and cash equivalents                      $ 346,930         $ 322,553
Accounts receivable, net of allowance for
doubtful accounts of $1,185 and $1,187 as        15,475            16,800
of
March 31, 2013 and December 31, 2012,
respectively
Inventory                                        11,431            11,096
Current deferred tax asset                       9,382             8,862
Prepaid expenses and other current assets        31,723            27,378
Income tax receivable                            -                 9,612
Investments                                      160,573          150,306   
Total current assets                             575,514           546,607
Leasehold improvements, property and             875,597           866,703
equipment, net
Long term investments                            195,520           190,868
Other assets                                     44,100            42,550
Goodwill                                         21,939           21,939    
Total assets                                   $ 1,712,670      $ 1,668,667 
Liabilities and shareholders' equity
Current liabilities:
Accounts payable                               $ 56,629          $ 58,700
Accrued payroll and benefits                     44,779            71,731
Accrued liabilities                              49,468            56,421
Income tax payable                               31,240           -         
Total current liabilities                        182,116           186,852
Deferred rent                                    172,917           167,057
Deferred income tax liability                    47,575            48,947
Other liabilities                                21,971           19,885    
Total liabilities                                424,579          422,741   
Shareholders' equity:
Preferred stock, $0.01 par value, 600,000
shares authorized, no shares issued as of
March 31, 2013 and December 31, 2012,            -                 -
respectively
Common stock $0.01 par value, 230,000
shares authorized, and 34,938 and 34,912
shares issued as of March 31, 2013 and           349               349
December 31, 2012, respectively
Additional paid-in capital                       834,262           816,612
Treasury stock, at cost, 4,005 and 3,819
common shares at March 31, 2013 and
December 31, 2012, respectively                  (572,483  )       (521,518  )
Accumulated other comprehensive income           (80       )       1,024
(loss)
Retained earnings                                1,026,043        949,459   
Total shareholders' equity                       1,288,091        1,245,926 
Total liabilities and shareholders' equity     $ 1,712,670      $ 1,668,667 
                                                                   

                                                             
Chipotle Mexican Grill,Inc.

Condensed Consolidated Statement of Cash Flows

(in thousands)
                                                                    
                                                  Three months ended March 31
                                                  2013            2012
Operating activities
Net income                                        $ 76,584        $ 62,664
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization                       22,936          20,084
Deferred income tax provision (benefit)             (1,923  )       1,803
Loss on disposal of assets                          1,340           1,250
Bad debt allowance                                  9               12
Stock-based compensation expense                    15,387          20,240
Excess tax benefit on stock-based                   (1,869  )       (68,392  )
compensation
Other                                               177             78
Changes in operating assets and liabilities:
Accounts receivable                                 1,309           (710     )
Inventory                                           (340    )       (1,102   )
Prepaid expenses and other current assets           (4,376  )       (4,738   )
Other assets                                        (1,588  )       (9,946   )
Accounts payable                                    773             2,909
Accrued liabilities                                 (33,893 )       (31,435  )
Income tax payable/receivable                       42,721          29,260
Deferred rent                                       5,880           5,130
Other long-term liabilities                         2,123          2,269    
Net cash provided by operating activities           125,250        29,376   
                                                                    
Investing activities
Purchases of leasehold improvements, property       (36,495 )       (41,864  )
and equipment
Purchases of investments                            (54,598 )       (60,382  )
Maturities of investments                           39,500         -        
Net cash used in investing activities               (51,593 )       (102,246 )
                                                                    
Financing activities
Acquisition of treasury stock                       (50,965 )       (27,011  )
Proceeds from employee stock plan                   155             81
transactions
Excess tax benefit on stock-based                   1,869           68,392
compensation
Other financing payments                            (35     )       (33      )
Net cash provided by (used in) financing            (48,976 )       41,429   
activities
                                                                    
Effect of exchange rate changes on cash and         (304    )       389
cash equivalents
Net change in cash and cash equivalents             24,377          (31,052  )
Cash and cash equivalents at beginning of           322,553        401,243  
period
Cash and cash equivalents at end of period        $ 346,930      $ 370,191  
                                                                    
Supplemental disclosures of cash flow
information
Decrease in purchases of leasehold
improvements, property and equipment accrued
in accounts payable                               $ 2,813        $ 149      
                                                                             

                                                             
Chipotle Mexican Grill,Inc.

Supplemental Financial and Other Data

(dollars in thousands)
                                                                          
                For the three months ended
                Mar. 31,      Dec.31,       Sep. 30,      Jun. 30,      Mar. 31,
                2013          2012          2012          2012          2012
Number of
restaurants       48            60            36            55            32
opened
Restaurant        -             -             (2    )       (1    )       -
relocations
Number of
restaurants       1,458         1,410         1,350         1,316         1,262
at end of
period
Average
restaurant      $ 2,105       $ 2,113       $ 2,119       $ 2,106       $ 2,072
sales
Comparable
restaurant        1.0   %       3.8   %       4.8   %       8.0   %       12.7  %
sales
increases

Contact:

Chipotle Mexican Grill, Inc.
Investor Relations:
Alex Spong, 303-222-2552
 
Press spacebar to pause and continue. Press esc to stop.